Wednesday, September 16, 2015

Gauge of US consumer spending rises in August

US consumer spending appeared to grow at a fairly healthy pace in August, pointing to solid domestic demand that could persuade a cautious Federal Reserve to hike interest rates on Thursday.

The Commerce Department said on Tuesday retail sales excluding automobiles, gasoline, building materials and food services increased 0.4% after an upwardly revised 0.6% increase in July.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Core retail sales were previously reported to have increased 0.3% in July.

August's increase was in line with economists' expectations. The retail sales report was the latest indication of sturdy economic momentum and suggested the recent stock market sell-off had little impact on consumer spending.

Signs of sustained strength in the economy could encourage the Fed to raise its benchmark overnight interest rate from near zero. The US central bank's policy-setting committee meets on Wednesday and Thursday against the backdrop of a tightening labour market, low inflation and slowing global growth.

Overall retail sales rose 0.2% last month as strong gains in auto sales were offset by a 1.8% drop in the value of sales at service stations due to a decline in gasoline prices.

Retail sales increased by an upwardly revised 0.7% in July. Economists polled by Reuters had forecast retail sales increasing 0.3% in August after a previously reported 0.6% rise in July.

Receipts at auto dealerships rose 0.7% after rising 1.3% in July. Sales at clothing stores rose 0.4%. Receipts at building materials and garden equipment stores fell 1.8% and sales at furniture stores declined 0.9%.

There were increases in sales at online retailers, restaurants and bars, sporting goods and hobby stores, and electronics and appliance outlets.
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